A current accounts and savings accounts are the two most common types of bank accounts offered by banks in Nigeria – but what exactly is the difference between the two and which type of account is right for a small business owner?
When it comes to operating bank accounts, most small business owners don’t know the key benefits and differences between a current account and a savings account. This post is aimed at helping business owners better understand the major differences between these two types of bank accounts mostly offered by Nigerian banks to individuals.
What's in this guide?
A current account is designed to facilitate regular or frequent transactions. It’s more suited individuals who are required to carry out frequent money transfers like businessmen, firms, companies, organizations, public enterprises, etc.
- Current Accounts derive their name from the purpose they are suited for, regular transactions.
- This type of account is more suited for users like firms, companies, public enterprises, businessmen, etc.
- Currents accounts do not earn any interest due to the fluidity they offer.
- Current accounts usually do not carry a limit on the number of transactions which can be made.
A savings account is designed to encourage and promote savings. A savings account is an ideal choice for any individual who earns a steady or regular income as salaried employees. This type of account is also ideal for those who have any short-term financial goals to meet such as a future vacation, financing a wedding, buying a car etc.
- A savings account is designed with the primary purpose to help you save.
- This type of account allows the holder to deposit money as is convenient, on which the holder can earn interest.
- A Savings account may be opened by an individual or jointly and requires the holder to usually maintain a pre-specified amount as a minimum balance.
- Interest rates earned on Savings Accounts range anywhere between 4% to 6%. These accounts do usually carry the facility of issuing cheques.
Which Bank Account Should I Get?
There’s no exact recipe you can follow when it comes to choosing a bank account for your small business. No two businesses are alike, so every business owner will want different things from the bank and the type of bank they choose.
A savings account differs from a current account in many ways and aspects. Both these accounts address different financial needs of the user, helping in better money management. Current accounts are generally best for managing day to day transactions while savings accounts are a safe home for keeping your extra cash and make some interest on your savings.